Tencent to invest an additional $150m in Chinese insurtech firm Waterdrop, sources say

Photo credit: Tencent

The Tencent-backed company will use the funds to expand its online platform and bolster its technology.

Both Waterdrop and Tencent declined to comment in respective emailed statements, Bloomberg added.

The additional funding comes after the Chinese startup raised US$230 million in a series D round that was jointly led by insurance giant Swiss Re and Tencent. Waterdrop also announced in July its plans of going public, targeting a valuation of about US$4 billion.

See also: A big win for insurtech

Waterdrop is a crowdfunding- and mutual aid-based platform that pays out when its members have a medical emergency.

One of its main businesses, Water Mutual, operates like a collective, with investors chipping in small amounts of money to help those who have been diagnosed with critical illnesses. In return, they receive payouts once they’re the ones in need. Last year, the company disclosed that it takes an 8% commission.

In April 2019, Waterdrop claimed having 78.8 million users and making payouts amounting to 440 million yuan (US$65.34 million) to 3,100 families so far.

China’s insurance industry has been rapidly developing in the past few years. In 2019, the premium income of China’s insurance companies amounted to around 4.3 trillion yuan (US$653.9 billion), nearly 3x as much as it was seven years ago.

See also: Can China’s ‘one for all, all for one’ approach to health insurance work in SEA?

Waterdrop is a rival to Ant Group’s mutual aid product Xiang Hu Bao, which provides its participants with a basic health plan against 100 types of critical illness.